'Dormant accounts': The £850m that lies forgotten just when we need it the most

Chiara Cavaglieri and Julian Knight see how to trace cash you may have lost touch with in a bank or investment

When finances are as tight as they are at the moment, it is difficult to believe anyone could lose track of their cash. However, that is precisely what millions of Britons do all the time. From current to savings to business accounts, official figures suggest we have simply forgotten about up to £850m of our own money.

It won't be lying neglected and unused for long. From the middle of this year, the Government has decided, money held in these "dormant accounts" will be siphoned into a central fund for distribution to good causes. The Big Lottery Fund is expected to be in charge of the handout.

An account is judged to be dormant if there has been no activity in it, or contact with the client, for 15 years. Normally, account holders lose contact due to a change of address, simply being too busy or, in some cases, death. Other people hold accounts they simply aren't aware of – particularly savings products set up by relatives on behalf of children.

The message is if you think you might have one of these accounts is to act quickly and try to track down the money before it is handed out. This is not a "use it or lose it" ultimatum as the law holds that dormant cash will always belong to the original account holders. But if they want it back, they will have to apply to the bank or building society or through Mylostaccount, and that may prove a long-winded process. What's more, savers are being urged to trace their cash as soon as possible as it's very likely to be languishing in a low-paying account.

Tracing your financial history can now be done with relative ease and speed. One of the best places to start is Mylostaccount.org.uk, a joint venture between three sponsors: the British Bankers' Association (BBA), the Building Societies Association (BSA) and National Savings & Investments (NS&I). It's just over a year old, and almost a quarter of a million people have used the service so far, although there are no figures available for how much cash has actually been reunited with British savers.

Mylostaccount combines the search facilities of all three organisations, giving individuals a one-stop shop for tracing "lost" money. Even accounts held with banks and building societies that now trade under a different name can be found in the database.

The service says it will get back to users inside three months with details of dormant accounts, and that it puts claimants directly in touch with the bank or building society. "Just as we now use the web to research our family histories, Mylostaccount helps us to trace our financial histories," says Angela Knight, chief executive of the BBA. "It is important to recognise that your money is always yours, even if you have lost touch with it. If it resides in a bank account, there are records that can link you to it, and this means Mylostaccount can find it."

Several banks have also made conscious efforts to help. So far, for example, the Halifax and Lloyds TSB have reunited their customers with £23m. However, they reckon there is at least another £93m left in dormant accounts that they manage. "We're going to be running an advertising campaign nationally and regionally to encourage more people to check if they have money in any old accounts," says Nathan Wallis, a spokesman for the Halifax. Separately, HSBC has reunited 3,500 customers with more than £5.5m since launching its own national advertising campaign in September last year.

But set against the estimated £850m dormant-account pot, such figures barely make a dent. It seems inevitable that many account holders will fail to re-establish contact with the relevant bank or building society before their cash is siphoned off into the distribution fund.

While schemes such as these cover dormant accounts in banks and building societies, they do not apply to other kinds of assets, such as pensions, share dividends, life insurance policies and investment funds. This is where the Unclaimed Assets Register, an independent financial search service, can come in. And according to the UAR, the inclusion of investments of this nature sends the total amount of unclaimed assets soaring to £15.3bn.

The UAR sees itself as complementing Mylostaccount. "Our service quite neatly complements it in that we cover other sorts of assets," says James Jones, consumer education manager at the UAR. "We provide a portal where consumers can come to us if they think they've lost touch with virtually any investment – not just the narrow number covered by the dormant account legislation."

Yet unlike Mylostaccount, the UAR is not a free service; customers have to pay £25 for every search of the database. Nonetheless, with 10 per cent of searches successful and an average of £6,000 reunited with those claimants, the register could be a worthwhile place to look.

If you're ready to put in the legwork, you can seek out any asset free of charge by going directly to the host of the relevant organisation. For occupational and personal pensions, you can contact the Pension Service (Thepension service.gov.uk), which provides an online tracing service. And you can go looking for any unit or investment trusts you think you might hold at the Investment Management Association (Investmentuk.org) and Association of Investment Companies (Theaic.co.uk).

When searching for lost money, always give as much information as possible, including maiden names where appropriate, all previous addresses and, of course, any account details.

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